In a sign of the mutual fund times, Fred Alger Management is launching two of its successful actively managed mutual funds in a new exchange traded funds wrapper.
The Alger 25 ETF and Alger Mid Cap 40 ETF mark the firm’s entry into the ETF space.
“The Alger 25 fund, which had grown to less than $25 million despite very strong performance in the active strategy, cut the fund’s current expense ratio by 20 basis point on Nov. 1,” reports Jeff Benjamin for Investment News. “The fund, which is up more than 29% so far this year, and gained more than 33% last year, was launched with a sliding expense ratio that ranged from 30 basis points to as high as 80 basis points depending on the 12-month trailing performance relative to the S&P 500 Index.”
The New Funds
The Alger 25 ETF will be managed by Dr. Ankur Crawford, Executive Vice President and Portfolio Manager. She has been with the firm for over 16 years and currently co-manages more than $22 billion in the firm’s U.S. large cap growth equity strategies. This ETF will execute a strategy similar to the Alger 25 Fund, which launched in 2017, by investing in 25 high-conviction large cap growth equities in the technology, health care, consumer discretionary, and industrials sectors.
Meanwhile, the Alger Mid Cap 40 ETF will be managed by Amy Y. Zhang, CFA, Executive Vice President and Portfolio Manager. The ETF will seek to invest in 40 high-conviction mid cap growth equities. Amy has been with the firm since 2015 and manages several of Alger’s small and mid cap strategies, including the Alger Small Cap Focus Fund, a five-star Morningstar rated fund.
“In addition to the Alger 25 Fund, the asset manager also plans to remove the fulcrum fee from the Alger 35 Fund (ATVVX). Alger 35, which is up more than 41% this year after gaining 30% last year, has grown to less than $15 million and will be stacking up against a mid-cap semitransparent ETF slated for launch early next year," according to Investment News.
Alger’s decision is the latest among venerable active managers to shift to a new ETF model that doesn’t require daily disclosures of portfolio holdings.